Central and regional government financial regulatory bodies in China held a video conference on Friday to discuss financial risk resolution, as reported by the People’s Bank of China on Sunday.

The meeting emphasized the need to coordinate financial support to address local debt risks and to regulate policies regarding real estate lending.

The fragile financial situation of local governments has hindered the central government from supporting the economy through fiscal policies, analysts at Rhodium Group stated in June.

The decline in land sales due to the real estate market downturn has also adversely affected the revenues of local governments.

So far, China has taken a relatively cautious approach to stimulus measures despite a general growth slowdown and repeated disappointing data in recent months. Earlier this year, authorities emphasized that financial risk prevention was a priority.

“The continued downturn in the Chinese real estate sector and the COVID-related restrictions from last year have strained the finances of many local governments,” S&P Global Ratings analysts stated in an early July report.

“This has widened the gap between the more prosperous coastal provinces of the country and the poorer inland regions,” the analysts said. “Investors are increasingly sensitive to the idea that some governments may not be able to rescue their debt financing vehicles.”

In recent weeks, Beijing has signaled a shift in its approach to real estate policy and has taken targeted steps to ease the situation.

On Monday, the People’s Bank of China lowered the one-year prime lending rate by 10 basis points to 3.45%, but kept the five-year rate, which underpins most mortgages, unchanged from a month ago at 4.2%.

A New Group of Decision-Makers Friday’s meeting reflected a gathering of a new group of financial decision-makers within the context of this year’s Chinese regulatory system reform.

The new head of the central bank and party secretary, Pan Gongsheng, delivered a speech at the meeting, as did the deputy heads of the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission, according to the report. The specifics of their remarks were not detailed.

The report stated that among the participants were representatives from major state-owned banks, the Shanghai and Shenzhen stock exchanges, and the administrative office of the Central Financial Commission.

In March, Beijing announced the establishment of a Central Financial Commission for high-level financial stability planning. The administrative office of the commission would take on the responsibilities of the Financial Stability and Development Committee of the State Council, a now-dissolved group previously overseen by retired Vice Premier Liu He.

The China Banking and Insurance Regulatory Commission, essentially replacing the banking and insurance regulatory agency, was also established this year.

The launch ceremony in May was attended by Vice Premier He Lifeng and representatives from the administrative office of the Central Financial Commission, according to state media.